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In re Industrias Desafio

February 26, 2007

RE: INDUSTRIAS DESAFIO, INC. AND INDUSTRIAS DESAFINO, SA DE CV, V ECKO COMPLEX, LLC AND SWEAT EQUITY LABORATORIES, LLC CIVIL ACTION NO.: 04-5265 (PGS)


The opinion of the court was delivered by: Ronald Hedges United States Magistrate Judge

LETTER-OPINION AND ORDER ORIGINAL FILED WITH CLERK OF THE COURT

Dear Counsel

INTRODUCTION

This matter comes before me on the motion of plaintiffs for leave to file a Second Amended Complaint pursuant to Rule 15(a). I have considered the papers submitted in support of and in opposition to the motion. There was no oral argument. Rule 78.

BACKGROUND

This motion arises out of the breach of contract claims of plaintiffs, Industrias Defasio, Inc. and Industrias Desafio, SA de CV ("Plaintiffs"), against defendants Ecko Complex, LLC, and Sweaty Equity Laboratories, LLC ("Defendants"), involving the purchase of equipment for the purposes of producing certain goods.

Plaintiffs allege that they entered into an Equipment Purchase Agreement to purchase Defendant's silk screening equipment as well as a related Preferred Supplier Agreement ("the Agreement"), to supply Defendants with a major portion of their garment requirements. Plaintiffs further allege that Defendants failed to pay for garments produced by Plaintiffs and ordered by Defendants under the Agreement and that Defendants failed to purchase its garment requirements from Plaintiffs as outlined in the Agreement. Additionally, Plaintiffs allege that Defendants intentionally breached and never intended to comply with the Agreement.

DISCUSSION

Pursuant to Rule 15(a), of the FRCP, leave to amend a complaint should be freely granted "when justice so requires." However, granting leave to amend is limited by the following five factors: 1) substantial or undue prejudice; 2) bad faith or dilatory motives; 3) undue or unexplained delay; 4) repeated failure to cure deficiency by amendments previously allowed; and/or 5) futility of amendment. E.g. Foman v. Davis, 371 U.S. 178, 182 (1962); Heyl & Patterson International, Inc.v. F.D. Rich Housing, Inc., 663 F.2d 419, 425 (3d Cir. 1981).

A. Undue Prejudice

If the proposed amendment requires the reopening of discovery, the prejudice to the non- moving party will be considered greater than if the proposed amendments present only a new issue of law. Harrison v. Dribeck, 133 F.R.D. 463, 469-70 (D.N.J. 1990). Substantial or undue prejudice to the non moving party is sufficient ground for denying a motion to amend. Lorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993). "The careful scheme of reasonable framing and enforcement of scheduling orders for case management would thus be nullified if a party could inject amended pleadings upon a showing of less than good cause after scheduling deadlines have expired." Harrison, 133 F.R.D. at 469-70.

B. Undue Delay

The liberal policy of freely permitting amendments must be tempered by the purposes of case management and the scheduling orders which "are at the heart of case management." Harrison, 133 F.R.D. at 469 (citations omitted). "In the absence of any apparent or declared reason such as undue delay.the leave ...


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